Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.
July 1, 2013 at 10:30 AM
A health-care boom or bubble
Here’s a look at where the jobs have been added over the past 10 years: Heavily in health care. The chart is profound because the trend line showed virtually no effect from the Panic of 2008 (aka “The Great Recession”). Also, as millions of manufacturing jobs were lost after China’s entry into the World Trade Organization in 2000 and because of other factors, the 2000s even before the bust were a lost decade for jobs. But not in health care. Indeed, going back to 2000 we would be at a net jobs loss accounting for population growth without that one sector.
The Brookings Institution reported today that the health-care sector now employs 14.5 million people, or about 10.3 percent of jobs, spanning all levels of skills and wages. Its 22.7 percent growth rate compares with 2.1 percent jobs increase for all other sectors. Health support workers earn 37 percent less on average than all workers in large metros. But health-care employment and a robust biomedical/biosciences economy do not necessarily coincide.
For example, Seattle-Tacoma-Bellevue is one of the 20 “least health-care intensive” metros in America as a percentage of employment compared with the overall jobs mix. Yet Seattle is an alpha biomed, biosciences and world-health city, with leading institutions. Another is Raleigh, amid a major biotech cluster. With the exception of Boston, Philadelphia and Pittsburgh, most of the metros with the highest percentage of workers in health care are those badly wounded by changes in the economy or are otherwise low-wage, limited economies. They include Dayton and Youngstown, Ohio; Detroit; McAllen, Texas, and Allentown, Penn. Even Cleveland, known for its famed eponymous clinic, has lost huge numbers of well-paying jobs and headquarters companies.
Brookings states, “The implementation of the Affordable Care Act and pressures to contain costs, expand access to care and improve health outcomes have focused attention on the healthcare industry.”
A big question is what effect it will have on this last refuge of large increases in employment. I have always been wary of Obamacare because it involves huge giveaways to the big insurers and compromises with the for-profit health-care industry. It didn’t even reform Medicare D to require Big Pharma to bid on drug prices for seniors. No one can predict the unintended consequences. And many oligarchs, who hold no love for the president, have every reason to sabotage ACA or use it as an excuse for any negative changes. (Lawmakers, by contrast, get excellent government health care).
But I also wonder about a bubble in American health care, from the proliferation of cancer centers to the steering of people into such careers as nursing where there may already be a glut in many cases. Health care is one area where, for individuals, market forces do not guarantee good outcomes. As a cure for persistent weak job growth, it has a limited shelf life. (A great primer on the problems in the U.S. system is Steven Brill’s Time magazine article, if you haven’t already read it).
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Today’s Econ Haiku:
The Oly force field
Bridge falls down, Senate shuts down